Income Tax Law and Practice

Dr. T. Srinivasan

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Income Tax Law and Practice

T. Srinivasan

ISBN 9789394828476

Publication Date Fri Jul 01 00:00:00 UTC 2022

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Biographical note

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Comprehensive and student-friendly, this book is designed to address the requirements of undergraduate students of Commerce of all major Universities.

Cover
Halftitle Page
Title Page
Copyright Page
Contents
Preface
CHAPTER 1 BASIC CONCEPTS
- 1.1 Abbreviations
- 1.2 Income Tax
  - 1.2.1 History of Income Tax
- 1.3 Assessee Sec.2(7)
- 1.4 Types of Assessee
- 1.5 Person Sec.2(31)
- 1.6 Income Sec.2(24)
  - 1.6.1 Features of Income
- 1.7 Gross Total Income Sec.80B(5)
- 1.8 Total Income Sec.2(45)
- 1.9 Agricultural Income Sec.2(1A)
- 1.10 Casual Income
  - 1.10.1 Assessment Year Sec.2(9)
  - 1.10.2 Previous Year Sec.3
  - 1.10.3 Taxation of Previous Years Income during the Same Year
    - Objective Type Questions
    - Review Questions
CHAPTER 2 RESIDENTIAL STATUS OF AN ASSESSEE
- 2.1 Taxable Entities
- 2.2 Types of Residential Status
- 2.3 Residential Status of an Individual Assessee
  - 2.3.1 Basic Conditions Sec.6(1)
  - 2.3.2 Additional Conditions Sec.6(6)
  - 2.3.3 Exception and Other Points to be Considered
  - 2.3.4 Resident
  - 2.3.5 Not Ordinarily Resident
  - 2.3.6 Non-Resident Sec. 2(30)
  - 2.3.7 Summary: Rule of Residence
- 2.4 Residential Status of HUF Sec. 6(2)
  - 2.4.1 Basic Conditions
  - 2.4.2 Additional Conditions
  - 2.4.3 Resident – Ordinary Resident HUF
  - 2.4.4 Resident and Not Ordinary Resident HUF
  - 2.4.5 Non-Resident HUF
- 2.5 Residential Status – Firm / AOP Sec. 6(2)
- 2.6 Residential Status – Company Sec.6(3)
- 2.7 Residential Status of Every Other Person Sec. 6(4)
- 2.8 Indian Income
- 2.9 Foreign Income
- 2.10 Incidence of Tax / Scope of Income
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 3 EXEMPTED INCOMES
- 3.1 Abbreviations
- 3.2 Introduction
- 3.3 Exempted Incomes
  - Objective Type Questions
  - Review Questions
CHAPTER 4 AGRICULTURAL INCOME
- 4.1 Abbreviations
- 4.2 Definition
- 4.3 Agricultural Operations
- 4.4 Instances of Agricultural Income
- 4.5 Instances of Non-Agricultural Income
- 4.6 Treatment of Agricultural Income
- 4.7 Partly Agricultural Income Rule 7
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 5 INCOME FROM SALARY
- 5.1 Salary – Definition Sec. 17(1)
  - 5.1.1 Features of Salary
  - 5.1.2 Advance Salary
  - 5.1.3 Arrears Salary
  - 5.1.4 Basis of Charge Sec. 15
- 5.2 Allowances
  - 5.2.1 Academic Allowance
  - 5.2.2 Conveyance Allowance
  - 5.2.3 Daily Allowance
  - 5.2.4 Helper Allowance
  - 5.2.5 Travelling Allowance
  - 5.2.6 Transfer Allowance
  - 5.2.7 Uniform Allowance
  - 5.2.8 House Rent Allowance Sec. 10(13A)
  - 5.2.9 Education Allowance
  - 5.2.10 Hostel Allowance
  - 5.2.11 Entertainment Allowance
  - 5.2.12 Tribal Allowance
  - 5.2.13 Running Allowance
  - 5.2.14 Transport Allowance
- 5.3 Perquisites Sec.17(2)
  - 5.3.1 Types of Perquisites
  - 5.3.2 Rent Free Unfurnished Accommodation (RFUA)
  - 5.3.3 Rent Free Furnished Accommodation (RFFA)
  - 5.3.4 Concessional Rent Accommodation
  - 5.3.5 Motor Car
  - 5.3.6 Medical Facility
  - 5.3.7 Free Domestic Servants
  - 5.3.8 Education Facility
  - 5.3.9 Concessional Loan
  - 5.3.10 Free Gas, Electricity and Water
  - 5.3.11 Free Meals
  - 5.3.12 Movable Assets
- 5.4 Retirement Benefits
  - 5.4.1 Profit in Lieu of Salary Sec. 17(3)
  - 5.4.2 Gratuity
  - 5.4.3 Pension Sec.17 (i) & (ii)
  - 5.4.4 Leave Travel Concession Sec. 10(5)
  - 5.4.5 Retrenchment Compensation Sec. 10(10B)
  - 5.4.6 Provident Fund
- 5.5 Deduction U/S 16 - Provisions
  - 5.5.1 Standard Deduction U/S 16(i)
  - 5.5.2 Entertainment Allowance U/S 16(ii)
  - 5.5.3 Professional Tax U/S 16 (iii)
- 5.6 Deduction U/S 80 C - Provisions
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 6 INCOME FROM HOUSE PROPERTY
- 6.1 Abbreviations
- 6.2 Introduction
- 6.3 Chargeability
- 6.4 Deemed Owners of House Property
- 6.5 Exempted Income from House Property
  - 6.5.1 Annual Value
  - 6.5.2 Factors Determining the Annual Value
  - 6.5.3 Municipal Rental Value (MRV)
  - 6.5.4 Fair Rental Value (FRV)
  - 6.5.5 Standard Rent (SR)
  - 6.5.6 Expected Rental Value (ERV)
  - 6.5.7 Composite Rent
  - 6.5.8 Unrealized Rent (URR)
  - 6.5.9 Loss Due to Vacancy (LDV)
  - 6.5.10 Computation of Income from House Property
- 6.6 Format for Computation of House Property Income
- 6.7 Important Points
- 6.8 Municipal Tax
  - 6.8.1 Points to be Remembered
- 6.9 Standard Deduction
- 6.10 Let Out Property (LOP)
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 7 DEPRECIATION
- 7.1 Abbreviations
- 7.2 Introduction
- 7.3 Reasons for Allowing Depreciation
- 7.4 Conditions to Claim Depreciation
- 7.5 Terms Related to Depreciation
  - 7.5.1 Actual Cost Basis
  - 7.5.2 Written Down Value [WDV] Basis
  - 7.5.3 Unabsorbed Depreciation [Section 32(2)]
  - 7.5.4 Tax Treatment
  - 7.5.5 Methods to Calculate Depreciation
- 7.6 Rates of Depreciation – Tangible Assets
- 7.7 Rates of Depreciation – Intangible Assets
  - 7.7.1 Computation of Normal Depreciation
  - 7.7.2 Computation of Additional Depreciation
    - Exercises
    - Objective Type Questions
    - Review Questions
CHAPTER 8 INCOME FROM BUSINESS OR PROFESSION
- 8.1 Abbreviations
- 8.2 Introduction
- 8.3 Important Terms
  - 8.3.1 Business Sec. 2(13)
  - 8.3.2 Profession Sec. 2(36)
  - 8.3.3 Vocation
  - 8.3.4 Speculation Business
  - 8.3.5 Illegal Business
  - 8.3.6 Bad Debts Recovered but Disallowed Earlier
  - 8.3.7 Bad Debts Recovered but Allowed Earlier
- 8.4 Basis of Charge Sec. 28
- 8.5 Principles for Charging under Business or Profession
- 8.6 Expenses Expressly Allowed
- 8.7 Expenses on Scientific Research Sec. 35
- 8.8 Other Deductions Allowed u/s 36
- 8.9 General Deductions Allowed u/s 37
- 8.10 Expenses Expressly Disallowed
- 8.11 Disallowed Expenses u/s 40
- 8.12 Disallowed Expenses u/s 40A
- 8.13 Compulsory Maintenance of Books Sec.44AA and Rule 6F
- 8.14 Compulsory Audit of Accounts Sec.44AB and Rule 6G
- 8.15 Income on Estimated Basis
- 8.16 Percentage of Expenses Expressly Allowed
- 8.17 Losses Allowable for Deduction
- 8.18 Treatment of Depreciation
- 8.19 Treatment "Under, Over Valuation" Stocks
  - 8.19.1 Simply Remember
- 8.20 Treatment of Bad Debts Recovered
- 8.21 Format for Computing Income from Business
- 8.22 Format for Computing Medical Profession
- 8.23 Format for Computing Auditing Profession
- 8.24 Format for Computing Legal Profession
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 9 INCOME FROM CAPITAL GAINS
- 9.1 Abbreviations
- 9.2 Introduction
- 9.3 Meaning of Various Terms
  - 9.3.1 Basis of Charge Sec. 45
  - 9.3.2 Capital Asset Sec. 2(14)
  - 9.3.3 Types of Capital Assets
  - 9.3.4 Short Term Capital Asset Sec. 2(42A)
  - 9.3.5 Long Term Capital Asset Sec. 2(29A)
  - 9.3.6 Transfer Sec. 2(47)
  - 9.3.7 Transfer Not regarded as Transfer Sec. 46 & 47
  - 9.3.8 Deemed Transfer
  - 9.3.9 Cost of Acquisition Sec. 55(2)
  - 9.3.10 Exception
  - 9.3.11 Deemed Cost of Acquisition Sec. 49(1)
  - 9.3.12 Indexed Cost of Acquisition
  - 9.3.13 Cost of Improvement Sec. 55(1)(b)
  - 9.3.14 Assets not considered as Capital Assets or Exempted Capital Assets
  - 9.3.15 Self Generated Assets
- 9.4 Cost of Inflation Index
  - 9.4.1 Computation of Short Term Capital Gain (STCG) - Format
  - 9.4.2 Computation of Long Term Capital Gain (LTCG) - Format
  - 9.4.3 Important Notes
  - 9.4.4 Exemptions Available U/S 54
    - Exercises
    - Objective Type Questions
    - Review Questions
CHAPTER 10 INCOME FROM OTHER SOURCES
- 10.1 Abbreviations
- 10.2 Basis of Charge
- 10.3 Incomes Chargeable under Other Sources
  - 10.3.1 Specific Incomes
- 10.4 General Income
  - 10.4.1 Taxability of Dividend Income
  - 10.4.2 Accumulated Profits
- 10.5 Interest on Securities
  - 10.5.1 Meaning of Interest on Securities
  - 10.5.2 Method of Accounting for Interest on Securities
- 10.6 Kinds of Securities
  - 10.6.1 Government Securities
  - 10.6.2 Commercial Securities
  - 10.6.3 Exempted Interest on Securities
  - 10.6.4 Grossing up
  - 10.6.5 Tax Deducted at Source
  - 10.6.6 Rate of TDS
  - 10.6.7 Bond Washing Transaction Sec. 94(1)
  - 10.6.8 Casual Income
  - 10.6.9 Interest not subject to Tax Deduction
  - 10.6.10 Stake Money
  - 10.6.11 Gift
  - 10.6.12 Allowable Deduction Sec. 57
  - 10.6.13 Inadmissible Deductions
  - 10.6.14 Deductions from Interest on Securities
- 10.7 Format for Calculation of IFOS
  - 10.7.1 Points to be Remembered
    - Exercises
    - Objective Type Questions
    - Review Questions
CHAPTER 11 CLUBBING OF INCOMES
- 11.1 Aggregation of Incomes
- 11.2 Clubbing of Incomes
- 11.3 Deemed Incomes
- 11.4 Income of AOP or BOI
- 11.5 Income from Firm
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 12 SET OFF AND CARRY FORWARD OF LOSSES
- 12.1 Abbreviations
- 12.2 Set Off and Carry Forward of Losses - Problems Layout
- 12.3 Intra-Head Adjustment (Inter Source Adjustment) Sec. 70
- 12.4 Inter-Head Adjustment Sec. 71
- 12.5 Set Off of Losses - Diagram
- 12.6 Carry Forward and Set Off of Losses
  - 12.6.1 Order of Set off
- 12.7 Carry Forward and Set Off of Losses - Diagram
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 13 DEDUCTIONS FROM GROSS TOTAL INCOME
- 13.1 Abbreviations
- 13.2 Deduction – Problems Layout
- 13.3 Sec.80C: Deduction in respect of Life Insurance Premia, Contribution to Provident Fund etc.
- 13.4 Sec.80CCC: Deduction in respect of Pension Fund
- 13.5 Sec.80CCD: Deduction in respect of Contribution to Notified Pension Scheme of the Central Government
- 13.6 Sec.80D: Deduction in respect of Medical Insurance Premium
- 13.7 Sec.80DD: Deduction in respect of Maintenance including Medical Treatment of a Dependent who is a Person with Disability
- 13.8 Sec.80DDB: Deduction in respect of Medical Treatment on Specified Disease
- 13.9 Sec.80E: Deduction for Interest Paid on Loan taken for Higher Education
- 13.10 Sec.80G: Deduction in respect of Donations to Certain Funds, Charitable Institutions, etc
- 13.11 Sec.80GG: Deduction in respect of Rent Paid
- 13.12 Sec.80GGA: Deduction in respect of Donations for Scientific Research or Rural Development
- 13.13 Sec.80GGB: Deduction in respect of Contributions given to Political Parties
- 13.14 Sec. 80IAB Deduction in respect of Profits and Gains by an Undertaking Engaged in Development of Special Economic Zone
- 13.15 Sec. 80IAC Deduction in respect of Eligible Start-Up
- 13.16 Sec. 80JJA Deduction in respect of Process of Bio-Degradable Waste
- 13.17 Sec. 80P Deduction in respect of a Co-operative Society
- 13.18 Sec.80QQB: Deduction in respect of Royalty Income of Authors of Textbooks
- 13.19 Sec.80RRB: Deduction in respect of Royalty on Patents
- 13.20 Sec.80TTA: Deduction in respect of Interest on Saving Accounts
- 13.21 Sec.80TTB: Deduction in respect of Interest on Deposits in Case of Senior Citizen
- 13.22 Sec.80U: Deduction in respect of Person with Disability
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 14 ASSESSMENT OF INDIVIDUALS
- 14.1 Abbreviations
- 14.2 Income of an Individual
  - 14.2.1 Procedure for Computing the Taxable Income
- 14.3 Rates of Income Tax for the A.Y 2022-23 [For Individual / HUF / AOP / BOI]
- 14.4 Rebate u/s 87A
- 14.5 Relief u/s 89
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 15 ASSESSMENT OF FIRMS
- 15.1 Abbreviations
- 15.2 Assessment of Firms - Problems Layout
- 15.3 Firm
- 15.4 Partner
- 15.5 Types of Partnership
  - 15.5.1 Conditions to be Fulfilled by a Firm U/S 184
  - 15.5.2 Conditions to be Fulfilled by a Firm U/S 40(B)
- 15.6 Procedure regarding Firm Assessed u/s 184
  - 15.6.1 Computation of Book Profit
  - 15.6.2 Computation of Business Income
  - 15.6.3 Computation of Total Income
  - 15.6.4 Computation of Tax Liability
  - 15.6.5 Taxable Income of Partners
- 15.7 Procedure regarding Firm Not Assessed U/S 184
  - 15.7.1 Computation of Business Income
  - 15.7.2 Computation of Total Income
    - Exercises
    - Objective Type Questions
    - Review Questions
CHAPTER 16 INCOME TAX AUTHORITIES
- 16.1 Abbreviations
- 16.2 Income Tax Authorities Sec. 116
- 16.3 Judicial Authorities
- 16.4 CBDT and its Powers
- 16.5 Powers of P.C.C / C.C / P.C / Commissioner
- 16.6 Powers of Joint / Deputy / Assistant Commissioners
- 16.7 Powers of Assessing Officer Sec. 2(7A)
- 16.8 Powers of Commissioner (Appeals)
- 16.9 Income Tax Officers
- 16.10 Tax Recovery Officers
- 16.11 Inspector of Tax
  - Objective Type Questions
  - Review Questions
CHAPTER 17 RETURN OF INCOME
- 17.1 Abbreviations
- 17.2 Voluntary Return of Income Sec. 139
- 17.3 Compulsory Return of Income Sec. 142 (1)
- 17.4 Prescribed Forms for Filing of Return
- 17.5 Belated Return Sec. 139 (4)
- 17.6 Revised Return Sec. 139 (5)
- 17.7 Defective Return of Income
- 17.8 Due Dates for Filing of Return Sec. 139 (1)
- 17.9 Benefits of Submitting Return
- 17.10 E-filing of Return
- 17.11 Procedure for E-filing of Return
- 17.12 Merits of E-Filing
- 17.13 Demerits of E-Filing
- 17.14 Permanent Account Number
  - Objective Type Questions
  - Review Questions
CHAPTER 18 ASSESSMENT PROCEDURE
- 18.1 Abbreviations
- 18.2 Types of Assessment
- 18.3 Self-Assessment Sec. 140A
  - 18.3.1 Fee for Late Filing of Return
  - 18.3.2 Format for Self-Assessment
- 18.4 Assessment by Assessing Officer
- 18.5 Summary Assessment / Assessment based on Return Sec. 143(1)
- 18.6 Regular Assessment
- 18.7 Scrutiny Assessment / Assessment based on Evidence Sec. 143(3)
- 18.8 Best Judgment Assessment Sec. 144
  - 18.8.1 Compulsory Best Judgment Assessment
  - 18.8.2 Discretionary Best Judgment Assessment
- 18.9 Re-Assessment / Income Escaping Assessment Sec. 147
  - Objective Type Questions
  - Review Questions
CHAPTER 19 ADVANCE PAYMENT OF TAX AND TAX DEDUCTED AT SOURCE
- 19.1 Abbreviations
- 19.2 Advance Payment of Tax
  - 19.2.1 Liability for Payment of Advance Tax Sec. 207
  - 19.2.2 Conditions to Pay Advance Tax Sec. 208
  - 19.2.3 Computation of Advance Tax Sec. 209
  - 19.2.4 Payment of Advance Tax Sec. 210
  - 19.2.5 Installments of Advance Tax and Due Dates Sec. 211
  - 19.2.6 Interest for Default in Payment of Advance Tax Sec. 234B
- 19.3 Tax Deducted at Source
  - 19.3.1 Features
  - 19.3.2 TDS Rates
  - 19.3.3 TDS on Salary Sec. 192
  - 19.3.4 TDS on Provident Fund Sec. 192A
  - 19.3.5 TDS on Interest on Securities Sec. 193
  - 19.3.6 TDS on Interest Other than on Interest on Securities Sec. 194A
  - 19.3.7 TDS on Insurance Commission Sec. 194D
  - 19.3.8 TDS on Payment of Life Insurance Policy Sec. 194DA
  - 19.3.9 TDS on Rent Sec. 194 I
- 19.4 E-TDS
- 19.5 E-TDS Procedure
- 19.6 Tax Collected at Source Sec. 206C
- 19.7 Differences between TDS and TCS
  - Exercises
  - Objective Type Questions
  - Review Questions
CHAPTER 20 APPEALS AND REVISION
- 20.1 Parties Involved in an Appeal
- 20.2 Stages in Appeal
- 20.3 Appeal to the Commissioner (Appeals) Sec. 246(2)
  - 20.3.1 Conditions
  - 20.3.2 Reason for Appeal before Commissioner (Appeals) Sec. 246A
  - 20.3.3 Feature / Procedure in Appeal before the Commissioner (Appeals) Sec. 250 and 251
- 20.4 Appeal to the Appellate Tribunal Sec. 252
  - 20.4.1 Constitution of Appellate Tribunal Sec. 252
  - 20.4.2 Reasons for Appeal to the Appellate Tribunal Sec. 253
  - 20.4.3 Powers of Appellate Tribunal
- 20.5 Appeal to the High Court Sec. 260A
  - 20.5.1 Procedure to Appeal to the High Court
- 20.6 Appeal to the Supreme Court Sec. 261
- 20.7 E-Appeal
- 20.8 Revision of Orders
  - Objective Type Questions
  - Review Questions
Annexure - I
- Budget Features [FY 2021-22]
Annexure - II
- Tax Rates [Applicable for the AY 2022-23]
Annexure - III
- Income Tax Calculation Statement
Subject Index
Section Index

Dr. T. Srinivasan, Professor of Commerce, Annamalai University, Chidambaram. He had served previously as Deputy Director and also as Public Information Officer in Directorate of Distance Education, Annamalai University. He has more than 25 years of teaching experience both at UG and PG level. He has authored one textbook and edited four books. He has published 51 papers in reputed journals and has presented 30 papers at national and international conferences. He has successfully guided 24 M.Phil and four Ph.D. students. Presently he is guiding six students in their Ph.D. programmes. His areas of specialization are Finance, Accounting and Taxation.

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